TaxTMI 
TaxTMI 
2024 (5) TMI 1554
X X X X Extracts X X X X
X X X X Extracts X X X X
....lus funds and not its operational income inserted in Co-operative Bank and is to be taxed as income from other sources. 4. Whether on the facts and circumstances of the case the CIT(A), NFAC has erred in deleting the addition and not justifying the decision of Hon'ble Supreme Court in Civil Appeal 1622 of 2010 on the case of Totgars Co-operative Sale Society Ltd. Vs ITO [2010] 188 Taxman 282 (SC), wherein the Apex Court has held that the words used in section 80P "the whole of the amount of profits & gains of business" emphasize that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society & as such interest earned on funds which are not required for business purpose falls under the category of other income taxable under the Income Tax Act. 5. The appellant requests that he may be allowed to furnish additional evidences. 3. Facts of the case, in brief, are that the assessee is a Credit Co-operative Society registered under the Maharashtra Co-operative Societies Act, 1960. It filed its return of income on 19.10.2020 declaring Nil income after claiming deduction of Rs.6,53,64,391/- u/s ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing this as proportionate cost, the expenditure to be allowed as deduction u/s 57(iii) of IT Act is arrived as under - 5,17,50,911/- x 8,22,02,790/- / 113,85,25,140/- = 37,36,473 Therefore Rs.37,36,473/- is the expenditure attributable in earning income of Rs.5,17,50,911/- which is now classified as income u/s 56 of IT Act. Hence, the net income of Rs.4,80,14,438/- is considered as net income from other sources and brought to tax accordingly. In view of the above, the assessee's claim of deduction u/s 80P(2)(a)(i) with respect to interest on bank deposits of Rs.4,80,14,438/-, as derived above for it not being operational income is hereby disallowed and brought to tax accordingly." 6. In appeal, the CIT(A) / NFAC allowed the claim of deduction made by the assessee by recording as under: "4.3 I have gone through the facts of the case. There has been a very recent Jurisdictional ITAT order, ITA No.553/PUN/2023 (Kai Fakira Jairam Patil Sahakari Patsanstha Maryadit Shahada vs ITO Ward-1, Dhule), which has thrown clarity on the issue: "This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi ['NFAC'] dated 24....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered by the Hon'ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon'ble High Court referring to the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) held that the ratio of decision of the Hon'ble Supreme Court in the aforesaid case (supra) not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. 9. Even the decision of Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to the decisions of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ety on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van' section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon'ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the Id. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the Id. Pr. CIT was not justified in exercising the revisional power anent to interest income of Rs.22,34,270/- earned on investments made with co-operative banks. 7. Respectfully following the decision of the Co-ordinate Ben....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A) in allowing the claim of deduction u/s 80P of the Act made by the assessee has been dismissed. 12. We find the Tribunal in assessee's own case for assessment year 2013-14 in ITA No.155/PUN/2017 vide order dated 23.01.2019 has decided the identical issue and dismissed the appeal filed by the Revenue by observing as under: "4. We have heard both the sides and perused the relevant material on record. The only issue in this appeal is whether interest income earned from FDRs with the nationalized banks is eligible for deduction u/s 80P of the Act? The Pune Bench of the Tribunal in the case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014) has allowed deduction u/s 80P of the Act in similar circumstances vide its order dated 19-08-2015. In that case, the Pune Bench discussed the contrary views expressed by the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 taxmann 309 (Kar.) allowing the deduction u/s. 80P on interest income and the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income ea....